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It looks like the president’s tariffs are beginning to show some effect on inflation. The latest CPI report showed that the inflation rate—while lower than the 2.5% economists had expected—crept up to 2.4% from April’s 2.3% rate. Core inflation—excluding food and energy—rose 2.8%, the same as April’s increase.

The number was helped by drops in apparel and automobile prices.

The unemployment rate remained stable at 4.2%. The ADP employment number was just 37,000, the lowest level since March 2023, and less than the 111,000 anticipated.

We don’t yet know what the inflation rate for June will be (report is due July 15), but in the latest Federal Reserve meeting—reading between the lines—it seems economists expect the Fed to lower rates a couple of times during the remainder of the year.

And, just in the last few days, it’s been reported that Goldman Sachs now expects the Fed to cut rates three times.

We’ll see.

This week’s Friday Update includes our comments on earnings from eight companies.

Hurricane Sandy has the market closed today and possibly tomorrow, but we don’t think that’s going to affect the market’s path all that much. It’s not 2008 out there, but there’s no question the intermediate-term trend is still down, and that earnings season has been generally rough thus far. We flipped our Market Monitor into neutral territory a couple of weeks ago and it remains there today; it’s better to focus on capital preservation these days than capital appreciation, though some new buying here or there is fine—just be sure to keep your positions smaller than normal, and to keep your stops in place.

The good news is that we have seen a decent amount of big-volume support appear in many stocks during earnings, including more than a few commodity and turnaround situations. Our favorite of the week is Packaging Corp. (PKG), a firm with a supposedly boring story ... but with exciting numbers and a beautiful chart.

Stock Name	Price	Buy Range	Loss Limit
3D Systems (DDD)	0.00	40-43	-
ARM Holdings (ARMH)	0.00	30-31	-
Cabot Oil & Gas (COG)	0.00	44.5-46.5	-
HDFC Bank Limited (HDB)	0.00	36-37	-
Jazz Pharmaceuticals (JAZZ)	0.00	53-56	-
Melco Crown (MPEL)	0.00	13.5-14.5	-
Michael Kors Holdings Limited (KORS)	73.22	53-55	-
Packaging Corp (PKG)	0.00	34.5-36	-
Royal Caribbean Cruises (RCL)	0.00	32.5-34	-
United Rentals, Inc. (URI)	0.00	37-39.5	-

The market remains healthy, with all major indexes in uptrends and no major signs of divergence, and thus I continue to recommend heavy investment in stocks that meet your portfolio’s goals.

However, the recent market rotation has seen growth stocks struggling while high-yielding safe stocks thrive—and our portfolio has been adjusting accordingly, week by week. And this week the trend continues, as we sell two more growth stocks.

This week’s recommendation is a small company with a valuable piece of the world’s mobile communications infrastructure, as its trading symbol makes so clear.

The broad market remains strong, and all Cabot’s market timing indicators are currently positive, so as we head into the New Year, I remain optimistic that we’ll see higher prices in the month ahead.

However, there’s always room for portfolio improvement, and as we head into January, there are a number of laggards in the portfolio that may be cut soon if they don’t shape up. Additionally, there is one stock you can sell this week for a quick five-week profit—though you can hold for longer-term gains if you choose.



As for the new addition, it’s an English stock (which is rare), but it has a good story as well as a good chart, so prospects are good. The stock was originally recommended by Tyler Laundon in Cabot Early Opportunities.



Details in the issue.

The world is about to change in a major way. So much so that you may look back ten years or even five years from now and realize how profoundly different things are since 2019.

The rapidly advancing rollout of 5G will be a technological tipping point that crosses a threshold into the digital age where everything is connected to the internet. Today, only a few things are connected. In a few years, the whole world will be computerized.



5G is such a game changer that many companies and governments can’t afford to be left behind. The current Administration has labeled 5G a national security priority. It seems 5G is the news arms race.



Those are the stakes. And it’s coming fast. In this issue, I identify a company that is at the epicenter of the 5G rollout. It holds vital technology that is light years above the competition and is necessary to connect any device to 5G. Earnings and revenues should skyrocket as the rollout proceeds in haste.

A few days ago, I reviewed the price charts on the 59 stocks in my “Waiting in the Wings” list – a list of undervalued growth stocks that I might add to these portfolios at some point. What really struck me was that less than 15% of them have attractive price charts right now.

U.S. stocks markets are now continuing their rebound from the horrendous fourth-quarter 2018 market action. The S&P 500 and NASDAQ indexes look quite bullish, while the Dow Jones Industrial Average (DJIA) lags a bit.

Stocks had a sluggish first week of 2024, but it’s not cause for concern yet. In fact, all of the Cabot Stock of the Week holdings are acting well enough that we haven’t had to subtract from the portfolio in weeks, allowing it to swell to 26 stocks with today’s new addition. It’s an undervalued dividend stock that is showing signs of life with interest rate cuts now firmly on the horizon – which should directly benefit its business. Tom Hutchinson just recommended the stock to his Cabot Dividend Investor audience.

Details inside.

This has been a week for the history books with record-breaking volatility and uncertainty.

My advice? Stay on the conservative side, leaning to blue-chip dominating stocks not tied to U.S.-China trade. Buy more gold. Since early 2022, gold has strongly outperformed inflation-protected Treasurys, so gold is now the world’s preferred safe-haven asset by many investors.

The President Trump reversal yesterday as Treasury bond market yields jumped and the U.S. dollar fell sent markets soaring. The U.S. raised China tariffs and China responded in kind. Unfortunately, both sides remain on a collision course.

“Smooth seas do not make skillful sailors.” - African Proverb

For the first time this year, this week all three major benchmarks closed at all-time highs during the same session on the hunch that a lousy job market will spur a series of interest rate cuts by the Federal Reserve.

In today’s note, we discuss pertinent developments for some of the stocks in the portfolio, including Alcoa (AA), Centuri Holdings (CTRI), Intel (INTC), Kenvue (KVUE), Paramount Global (PARA) and SLB Ltd. (SLB).

Alcoa (AA) is navigating tariff-related challenges relating to aluminum pricing and sourcing.

SLB Ltd. (SLB) is well positioned to benefit from anticipated oil and natural gas price increases arising from the Iran/Israel conflict.

Last week, I asked readers what they thought of airlines’ complex pricing schemes. (If you missed the issue, you can still read it here on the website.) Several of you responded with interesting comments, including the ones below. For the most part I don’t have a problem with the myriad and...

Tesla remains on course as the leading force in the transition from a fossil fuel automobile environment to one powered by efficient electricity.

This week is a reminder that markets don’t always go up. The big surprise was that it took so long for global markets to wake up to the threat.

The market is forward looking. It senses an end to this pandemic crisis and a reopening of the economy sooner rather than later. That’s good news. And I agree. The end-of-the-world pessimism that caused the market crash is being tempered. It’s a very good thing.